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Work Opportunity Tax Credit

WOTC Program is on Hiatus Effective January 1, 2015

Certification Requests Submitted in 2014 Will Be Processed Retroactively

UPDATE: Effective February 19, 2015, A Transition Relief Period Applies

The Work Opportunity Tax Credit (WOTC) program’s legislative authority for all WOTC target groups expired on December 31, 2013. On December 19, 2014, the President signed into law P.L. 113-295, the Tax Increase Prevention Act of 2014 (the Act), reauthorizing the WOTC program and the Empowerment Zones (EZs), without changes, from December 31, 2013 through December 31, 2014.

The retroactive extension granted by P.L. 113-295 applies to new hires that began to work for an employer on or after December 31, 2013, and before January 1, 2015. This means that DOES may issue final determinations of filed certification requests for new hires that began to work before January 1, 2015.

For most or all certification requests received during the 2014 hiatus that were processed:

DOES will issue all those certifications and denials to employers or their representatives.

For those certification requests that were received and filed during the 2014 hiatus but were not processed:

DOES will process and conduct all required eligibility determination activities for those certifications requests and will issue final certifications and denials to employers or their representatives.

UPDATE: On February 19, 2015, the IRS published a notice of transition relief for WOTC, meaning that constituents have additional time to submit their requests for the WOTC. The Relief Period allows constituents to submit WOTC certification requests until April 30, 2015, if they hired a member of a target group between January 1, 2014 and December 31, 2014.

Denials issued due to untimely filing will be reconsidered. Denials issued due to ineligibility are definitive and will not be reconsidered.

Please be aware, however, that the new Act retroactively reauthorized WOTC to be in effect only through December 31, 2014, and thus, WOTC’s legislative authority has again expired. As a result, the program is currently undergoing an authorization lapse and is in a “hiatus” period.

The U.S. Department of Labor’s Employment and Training Administration (ETA) is currently working jointly with the Internal Revenue Service (IRS) to issue official guidance in the coming weeks.

Per ETA’s Training and Employment Guidance Letter (TEGL) 08-13 regarding the 2014 authorization lapse, direction has been given to follow similar steps regarding the 2015 authorization lapse until further notice. This will allow State Workforce Agencies to continue to accept and process applications for valid target groups that are timely filed for employers' new hires made on or after January 1, 2015. IRS Notice 2015-13 does not apply to 2015 hires. The Act did not change any program requirements or target groups.

Therefore, DOES will continue to accept and mark as timely all certification requests for employers’ new hires made on or after January 1, 2015 that are received during the hiatus and are filed within the 28 days of the applicant's start of employment, until informed otherwise by ETA. We will not, however, issue eligibility certifications for these applications unless the program is reauthorized. We encourage District employers to continue to submit all eligible WOTC applications in a timely manner although Congress has not made a decision on reauthorization of the program or retroactive eligibility certifications.

Please be advised that WOTC applications for Designated Community Residents or Summer Youth Employees living in the District are no longer valid due to expiration on December 31, 2011. However, other state residents within these target groups working for businesses located in the District may qualify.

All active consultant or company representatives with access to our WOTC database may access all approved 2014 determinations that have been in a pending status on Wednesday, January 14, 2015. Access to enter or upload applications for the transition relief period in 2014 and 2015 will be uninterrupted.

The Work Opportunity Tax Credit (WOTC) is a federally-funded program that reduces the federal tax liability of private-for-profit employers hiring new employees from selected target groups. Individuals in these target groups have consistently had difficulty obtaining employment. Employers hiring qualified applicants may obtain tax relief through the WOTC program. Credit amounts are based upon a percentage of wages paid to, and hours worked by, properly certified employees.

Program Dates: Congressional legislation governs the WOTC that is available to employers on a year-round basis.

Program Details

The WOTC is governed by Public Law 111-312; Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The WOTC undergoes changes and extension(s) and modification to target groups as Congress sees fit. Any target group may be discontinued, modified, or placed on hold for reauthorization. Employers and employer representatives may continue to submit applications for those target groups until a legislative decision is made and a Training Employment and Guidance Letter has been issued by the US Department of Labor Employment and Training Administration with instructions for State Workforce Agencies.

How To Apply

To apply for the Work Opportunity Tax Credit, an employer or employer representative must submit the IRS 8850 and ETA 9061 within 28 days (unless the US Department of Labor applies a period of transition relief) of the new hires’ start date to the state workforce agency, Department of Employment Services to the attention of the WOTC Coordinator. If you are an employer representative, an IRS 2848 or other form of a valid Power of Attorney is required. The application should include documentation to support the verification of the identified target group, if applicable. Submissions may be received electronically through our WOTC database. Email does.wotc@dc.gov to inquire about access to our WOTC database.

Eligible Target Groups

Employers hiring qualified applicants in the following target groups may apply for the federal tax relief under the WOTC program:

The Vow to Hire Heroes Act of 2011 (P.L. 112-56) expands and extends the Qualified Veterans groups. The five-year period of discharge is rescinded for this target group to include individuals hired on or after November 22, 2011, and before January 1, 2013. A qualified veteran is a veteran who meets the following criteria:

a member of a family that received SNAP benefits (food stamps) for at least a three-month period during the 15-month period ending on the hiring date,

entitled to compensation for a service-connected disability and who is hired within one year of discharge or release from active duty in the US Armed Forces, or

entitled to compensation for a service-connected disability and unemployed for a period or periods totaling at least six months of the year ending on the hiring date.

The legislative authority for the WOTC program's non-veteran groups expired on December 31, 2011 and is currently under Congressional advisement. Given that the non-veteran groups may be reauthorized based on legislative history for WOTC, employers may still submit certification requests for these groups to states. States will accept and may process requests but not issue determinations until WOTC is reauthorized. If extended by Congress, for an employee to be certified as an eligible group member by a State Workforce Agency, the new hire must belong to one of the following target groups:

Long-term TANF Recipient. A member of a family that meet the following criteria:

Received TANF payments for any 18 months (whether or not consecutive) beginning after August 5, 1997, and has a hiring date that is not more than two years after the end of the earliest 18-month period after August 5, 1997, or

Stopped being eligible for TANF payments during the past two years because a federal or state law limited the maximum time those payments could be made.

Short-term TANF Recipient. A member of a family that received TANF benefits for any nine-month period during the 18-month period ending on the hiring date.

Supplemental Nutrition Assistance Program (SNAP) Recipient. An 18-39 year old member of a family that received SNAP benefits for the six months ending on the hiring date or received SNAP benefits for at least three of the five months ending on the hiring date.

Vocational Rehabilitation Referral. An individual with a disability who completed or is completing rehabilitative services from a state-certified agency, an Employment Network under the Ticket to Work Program, or the US Department of Veterans Affairs.

Note: HUD's urban and USDA's rural designated EZs expired on December 31, 2011. The Summer Youth group is no longer a target group.

Ex-Felon. An individual who has been convicted of a felony and has a hiring date which is not more than one year after the last date on which he was so convicted or released from prison.

SSI Recipient. A recipient of Supplemental Security Income benefits for any month ending during the past 60-day period ending on the hire date.

Minimum Employment or Retention Period, In addition to belonging to one of the eight groups outlined above, all new adult employees must work a minimum of 120 hours for the employer to qualify to claim the WOTC.

Ineligible Populations, The following individuals or groups of individuals do not qualify for the WOTC, even if they meet the other eligibility criteria:

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